Economy & Budget

Misplaced priorities (Rep. Paul Broun)

As the old saying goes, “Don’t put off until tomorrow what you could do today.” With 15 million unemployed Americans, Democrats may be wishing they had heeded this advice.

The fact is after Democrats implemented a failed, trillion-dollar stimulus, they looked the other way.  And instead of keeping a close eye on the job market, they quickly pivoted and passed a law that allows the federal government to takeover our nation’s health insurance.   Over a year later, our nation’s economic troubles have not disappeared.  However, the liberal leadership in Washington continues to put off today what they should have done yesterday.

Unfortunately, the millions of unemployed Americans do not have the luxury of ignoring these problems.  As they struggle to make ends meet, it’s time for Washington to address American’s number one priority: job creation.

My JOBS Act would fix previous mistakes and rescind any unspent funds from the failed stimulus.  It would also provide immediate relief for small businesses as it puts money back where it belongs—in the hands of job creators.   It’s time to address the issues facing our nation’s economy today.

From Broun's blog.

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Democrats ignore causes of housing crisis, refuse to rein in Fannie & Freddie (Sen. Jim DeMint)

Fannie Mae and Freddie Mac are more overleveraged and more underwater than any of the banks in trouble, but the Dodd bill doesn’t even mention them in its hundreds of pages.

Senator McCain has offered an amendment that would repeal their liberal housing goals that encouraged more risky lending and fueled the housing crisis, as well as end their dominance of the mortgage market and let the private sector back in. While more needs to be done to quickly end the permanent bailout of these mortgage giants, the McCain amendment is an important first step.

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VIDEO: Shelby defends GOP stance on Wall St. reform

Sen. Richard Shelby (R-Ala.) defended Republicans' opposition to date of the Wall Street reform bill before the Senate, casting the GOP as acting on behalf of small businesses.

Shelby, the ranking member of the Senate Banking Committee, said that the financial reform bill should also include reforms of mortgage giants Fannie Mae and Freddie Mac.

Watch the video below:

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Wall Street reform: families vs. big banks (Rep. Paul Tonko)

During the last three months of the Bush Administration, we lost, on average 726,000 jobs per month.  In the last three months under the Obama Administration, we have created an average of 54,000 jobs per month – a sharp contrast. Since passing and enacting the Recovery Act, the Dow Jones has gone up over 60%; the S&P is up over 70%; and the NASDAQ is up nearly 90%.  Finally, average tax refunds are up 10%, to nearly $3,000 per family.  However, our work is not done until we reform the heart of the root cause of this recession: Wall Street.

Wall Street reform is currently under debate in the United States Senate. In my opinion, the debate is straightforward; those who support hard working American families and small businesses against those who wish to protect the status quo and big Wall Street banks, which are to blame for the current recession.  For example, last year the House passed HR 4173, the Wall Street Reform and Consumer Protection Act of 2009.   The number of Republicans that voted for the bill: zero.

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It’s time to walk the walk (Rep. Paul Broun)

The Hill reported on Sunday that Speaker Pelosi sent letters to her Committee Chairmen last Wednesday asking them to “redouble” their efforts to reign in federal spending.   However, as The Hill notes, almost exactly a year ago Speaker Pelosi sent very similar letters prior to supporting a budget that drastically increased our national debt.  In fact, Speaker Pelosi has presided over more than three years of record-high deficit spending.

Acknowledging the need to restore fiscal discipline is a step in the right direction, but as Speaker of the House, Pelosi needs to do a lot more than send a few letters.  Proposing a budget would be a first step.  April 15th, the deadline for Congress to submit their annual budget, has come and gone.  And, it is becoming more and more apparent that we may never see a budget.

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Hands off our retirement savings! (Rep. Michele Bachmann)

There have been rumblings from the Obama Administration regarding efforts to create "Guaranteed Retirement Accounts" and impose new government mandates which would undermine 401(k) retirement savings plans and jeopardize employers’ willingness to continue offering them to their workers.

Human Events reports that Vice President Biden mentioned this idea in February as part of the White House's "Annual Report on the Middle Class." They also report that "in conjunction with the report’s release, the Obama administration jointly issued through the Departments of Labor and Treasury a 'Request for Information' regarding the 'annuitization' of 401(k) plans through 'Lifetime Income Options' in the form of a notice to the public of proposed issuance of rules and regulations."

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Future shock

Greece can’t issue new bonds or, for that matter, turn over old debt, because investors fear the country will eventually default. And, as you’ve probably rediscovered in the last few weeks, Greece’s membership in the European monetary union effectively prevents the government from paying its bills by printing money because Greece’s central bank doesn’t have the authority to create euros.

But the debt-ridden United States could never be caught in that circumstance because Uncle Sam can create dollars, and thus can always meet its fiscal obligations by selling dollar-denominated bonds to the Federal Reserve. Right?

The answer to that question is no longer as simple as it seemed even a year or two ago. Yes, unlike Greece, the United States has the technical ability to create as much of its own currency as its regulators choose. But in global financial markets that have just begun to rethink the safety of holding assets in the form of the sovereign debt of the world’s economic superpower, it is far from clear how such an event would play out.

OK. Say the day comes when United States is unable to find private investors (more to the point, government investors including the Bank of China and the Bank of Japan to absorb its latest debt offerings and instead sells the IOUs to the Fed in return for dollars deposited to Treasury accounts). If nobody blinks – that is, if the owners of the trillions of dollars in outstanding Treasury obligations don’t react by trying to sell their bonds – all that happens is the U.S. money supply gets a little bigger. That would be a bit inflationary in the long run. But in a global climate in which deflation seems more of a threat than inflation, no big deal.

More likely, though, investors would blink: Owners of U.S. Treasuries would try to exchange them for assets denominated in other currencies, driving down both the market value of Treasury securities and the exchange value of the dollar. Just where that fire sale on dollars would take the global economy is one of the great imponderables of contemporary international finance.  Other governments (and the IMF) would surely come to America’s aid, buying up Treasury debt in order to stabilize exchange rates. But America isn’t Argentina: the volume of outstanding U.S. debt is humungous, and other governments would be loath to pony up the sums that might be needed to convince private investors (as well as skittish central banks in Asia and the Persian Gulf) to stop dumping dollars.

In any event, even in the best of scenarios, the rescue effort would be temporary. Unless Washington sharply cut its budget deficit, the fix wouldn’t stick.

So, what has changed since the days when the dollar was truly the only global currency? Lots of things. But two biggies stand out. First, more than 100 percent of the world’s (entirely ample) savings has been accumulated outside the United States in recent years -- a process that must eventually force people and governments to contemplate how the imbalance will right itself. Second, the era of uncontested American dominance is ending, and no collective institutions have risen to replace it as keeper of global economic stability.

Greece’s fiscal problems are scary. America’s are much, much scarier.

Bob Hahn and Peter Passell are the founders of Regulation2point0.org, which features original content and aggregation on economic regulation.

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